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【The New York Times】America’s Competitors Angle for Silicon Valley’s Business

Wednesday,Aug 02, 2017

The view through a window used to organize activities at Wizeline’s office in Guadalajara, which is sometimes called the Silicon Valley of Mexico. Wizeline, a start-up based in San Francisco, has its main operations in Guadalajara. CreditRodrigo Cruz for The New York Times

GUADALAJARA, Mexico — With his frequent refrains about Mexicans and the need for a wall to contain them, it’s no surprise that President Trump has made few friends in Mexico.

Yet here in the capital of Jalisco State, sometimes referred to as Mexico’s Silicon Valley, people are practically celebrating him.

“He’s helping us a lot!” Gov. Aristóteles Sandoval exclaimed. “He’s put us on the world’s agenda.”

As part of Mr. Trump’s efforts to push an America-first philosophy, he has vowed to restrict the availability of special visas that are widely used by technology companies to hire talent from around the world.

Mr. Trump’s plans, combined with an American political climate that has left many immigrants feeling less welcome, has cast a pall of uncertainty over the American tech industry, which relies heavily on highly skilled workers from abroad.

But while entrepreneurs and executives in the United States are fretting, other countries — including Mexico, Canada and China — are salivating over the Trump administration’s rumblings.

Silicon Valley’s loss, they say, could be their gain.

In recent months, foreign governments and tech industry leaders have sought to capitalize on the uncertainty in Silicon Valley. They are stepping up their efforts to attract engineers and entrepreneurs who might rely on the special American visa program, known as H-1B, to work or to run businesses in the United States.

Andy Kieffer, founder of Agave Lab, a venture capital firm in Guadalajara. Interest in Mexico among investors seems to have shot up, he said. CreditRodrigo Cruz for The New York Times

“It’s an exciting time,” said Brad Duguid, the minister of economic development in Ontario, where the capital, Toronto, is one of Canada’s biggest tech hubs. “And while it’s unfortunate that the U.S. is looking more internally, far be it from us not to take advantage of that.”

In June, Canada set up a new visa program that makes it easier for companies to recruit highly skilled foreign workers. Under the program, which was in development before Mr. Trump’s election victory, the Canadian government has promised to approve two-year visas in less than two weeks — blindingly fast, compared with the process in the United States.

And unlike the H-1B visa in the United States, there is no limit to the number of Canadian visas available.

Beyond that, Ontario is in the early stages of preparing a social media campaign for technology executives around the world to sell the province as a place for investment.

“Canada is seizing its moment,” said Navdeep Singh Bains, the country’s federal minister of innovation, science and economic development. “We’re open to trade and people.”

In Mexico, states with growing regional tech hubs, like Jalisco, have been redoubling their efforts to attract talent and investment in recent months, peddling a philosophy of openness that departs from what Mr. Sandoval called Mr. Trump’s “xenophobia” and “lack of global vision.”

The efforts have included visits by Jalisco officials to the San Francisco Bay Area and to Europe. The San Francisco Chronicle published an op-ed piece by Mr. Sandoval pitching the advantages of doing business in his state.

The officials herald Mexico’s proximity to Silicon Valley, its alignment with time zones in the United States and its lower cost of living. They are also sweetening the invitation with enticements like tax incentives and promises of full government cooperation.

Employees of the start-up Musical.ly in Shanghai. China’s tech leaders hope to seize on opportunities created by President Trump’s immigration policies. CreditGilles Sabrie for The New York Times

“We want you,” says a new promotional website, Come2Jalisco.com. “Innovation has no borders.”

Even Mexico’s ambassador to India has echoed the pitch.

“We will be more than happy to have Indians relocate to Mexico,” the ambassador, Melba Pría, told The Indian Express newspaper earlier this year, emphasizing the “visa ease” that foreign talent will experience in Mexico.

China’s tech leaders have also been seizing on the opportunity created by Mr. Trump’s immigration policies.

Wang Huiyao, founder and president of the Center for China and Globalization (CCG), a research group in Beijing, said Mr. Trump’s “America First” doctrine was a boon for China’s efforts to attract foreign tech talent and persuade Chinese engineers now working abroad to return home.

“China is shifting from attracting foreign capital to foreign talent,” Mr. Wang said. “The U.S. is losing out.”

Among the Chinese voices leading the push is that of Robin Li, the chief of Baidu, China’s largest search engine.

“Many entrepreneurs in Silicon Valley have expressed their concern that this will hurt America’s field of innovation,” Mr. Li said recently at China’s World Internet Conference. “I really hope that talent from all over the world comes to China.”

President Emmanuel Macron of France has sought to throw open a slightly different door. When Mr. Trump announced that he was pulling the United States out of the Paris climate accord, Mr. Macron extended an unusual offer to Americans: “To all scientists, engineers, entrepreneurs, responsible citizens who were disappointed by the decision of the president of the United States, I want to say that they will find in France a second home.”

Robin Li, chief executive of the Chinese search engine Baidu, at a data conference earlier this year in Guiyang, China. Mr. Li hopes to draw tech talent to China. CreditImaginechina, via Associated Press

These messages of welcome stand in contrast to the Trump administration’s tough approach to immigration.

In an executive order this spring, Mr. Trump directed federal agencies to review immigration laws with an eye toward ending what he called “the theft of American prosperity.”

The president has taken particular aim at the H-1B visa program, under which the government admits 85,000 highly skilled foreign workers every year, most of them in the tech field.

Mr. Trump says businesses use the program to avoid hiring higher-paid Americans, and his executive order instructed the agencies to ensure that visas were awarded to the most skilled, best-paid immigrant workers.

Disney, Toys “R” Us, Southern California Edison and New York Life are among the companies that have laid off American tech workers who first were asked to train their replacements — tech workers from low-wage countries like India brought in on temporary visas. In some cases, the jobs themselves went back home with the new workers.

Canada revised its temporary visa program partly because the Royal Bank of Canada, the country’s largest financial institution, shuffled jobs overseas using that technique.

Mr. Trump’s executive order made no immediate changes, but it has sowed concern throughout the industry. Competition for H-1B visas was already intense. The government received 199,000 applications in the first five days of its lottery this year, then stopped accepting them. Many companies fear that Mr. Trump’s efforts might put highly skilled immigrant workers even further out of their reach.

A change could favor the biggest American tech companies, which tend to pay the highest wages. But it could hurt some of the biggest users of the H-1B program — the outsourcing companies, including several from India — that bring thousands of workers to the United States on lower wages to handle computing tasks for banks, health care companies and other firms.

Jaime Reyes Robles, an official with the Mexican state of Jalisco, said President Trump’s immigration policy “has been our best marketing.” CreditRodrigo Cruz for The New York Times

It could also hurt start-ups and smaller firms without the cash to compete on salaries.

Adding to the uncertainty, the Trump administration said last month that it would delay, and perhaps eliminate, an Obama-era rule allowing thousands of foreign entrepreneurs to move to the United States every year to build start-ups.

“People here are extremely nervous,” said Andreas Kraemer, managing partner of MITA Ventures, a San Francisco-based venture capital firm. “This whole area is driven by immigration.”

The White House referred questions about whether the uncertainty surrounding temporary visas could shift jobs to other countries to the Department of Homeland Security. The department declined to comment on Tuesday.

León David Pérez, president of Propulsar, a Mexico City-based company that develops tech start-ups and has an office in San Francisco, argued that Mr. Trump’s policies could jeopardize Silicon Valley’s culture of creativity.

“When you want to spur innovation, the best way to generate it is to employ the greatest diversity of people,” he said. “That’s what’s being threatened with Trump’s policies.”

The uncertainty in Silicon Valley — combined with the invitations from around the world — have already begun to lead some tech companies and entrepreneurs to rethink the gravitational pull of Silicon Valley.

Business interest in Jalisco has soared since Mr. Trump’s election, leaders in the state’s tech sector contend. Mr. Trump’s immigration policies, said Jaime Reyes Robles, Jalisco’s secretary of innovation, science and technology, have been “our best marketing.”

In 2003, Manuel R. Gutiérrez Novelo, a Mexican engineer, moved to Silicon Valley to develop TDVision Systems, a company specializing in 3D technology. He went on to develop a multipronged operation based in California, with offices in Europe and Asia.

Wizeline’s office in Guadalajara, where public officials have been redoubling their efforts to attract talent and investment in recent months. CreditRodrigo Cruz for The New York Times

But in recent weeks, he uprooted his businesses and moved them back to Guadalajara, his hometown. Mr. Trump’s efforts to restrict immigration were a big reason, he said, calling them anathema to his company’s philosophy and a potential barrier to hiring foreign workers.

“If I saw Donald Trump, I’d tell him he has lost my business,” he said.

For decades, Jalisco was mainly a center for tech manufacturing. But as its talent pool has expanded, fed by highly regarded engineering programs at local universities, it has increasingly become a place for high-tech innovation.

Andy Kieffer, an American entrepreneur who runs Agave Lab, a venture capital firm in Guadalajara, said that when he was seeking investors in Silicon Valley several years ago, he was waved off.

“I couldn’t get anyone to look at Mexico,” he recalled. “They said, ‘Look, I don’t know anything about Mexico. It’s off my radar.’”

But in the past several months, he said, interest among investors has shot up.

In Canada, officials expect their new visa to give their tech industry a big boost. Not only is there no limit on the number of visas, but government employees have been hired to act as visa concierges to make it easier for companies.

“It’s a huge advantage when you contrast it to what’s happening across the border,” said Stephen Lake, whose company, Thalmic Labs, produces devices that enable users to control computers through gestures.

Sharoon Thomas, an Indian entrepreneur, last year began shifting his start-up from Mountain View, Calif., to Toronto, and officially made the move in May. Seven of his engineers are still working in the United States and other countries, but he plans to use Canada’s new visa program to bring them north.

“Canada’s immigration policy makes you feel more welcome than the U.S.,” said Mr. Thomas, whose company, fulfil.io, designs software to manage inventories.

Evan J. Green, an immigration lawyer in Toronto, said he was helping companies in banking, insurance and retail seek visas for employees.

“These people have options,” he said. “This is the best and the brightest of the world. We want these people. This is good for Canada. Let’s keep the door open while they’re slamming it shut south of the border.” (By KIRK SEMPLE and IAN AUSTEN)

From The New York Times,2017-08-02
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